Sol Man Baysa Chapter 1

CHAPTER 1
Partnership Formation and Operations

EXERCISES
Exercise 1 1
1.a
Campos, Capital
Allowance for Uncollectible Accounts
14,000
Goodwill
Campos, Capital
30,000
14,000
30,000
Accumulated Depreciation
Campos, Capital
Furniture and Fixtures
1.b
6,000
6,500
12,500
Campos, Capital
Cash
40,000
Cash (P83,500 x 1/2)

Tomas, Capital
To record contributions of Tomas
41,750
40,000
41,750
Req. 2.
Campos and Tomas Partnership
Statement of financial Position
July 1, 2008
Assets
Cash
Accounts Recl
Less Allowance for
Uncol Accts.
Inventory
Furniture
Goodwill
TOTAL ASSETS
Liabilities & Owners Equity

P60,000
24,000
P41,750
36,000
100,000
7,500
30,000
P215.250
Accounts Payable
Campos, Capital
Tomas, Capital
P90,000
83,500
41,750
________
TOTAL LIABILITIES &

OWNERS EQUITY
P215,250
Exercise 1-2
1.
2.
Cash
Accounts Receivable
Merchandise Inventory
Equipment
Accounts Payable
Notes Payable
Bernal, Capital
Cash
90,000
36,000
54,000
25,000
2,000
21,000
18,000
164,000
100,000
AA 1 - Chapter 1 (2008 edition)
page 2
Camino, Capital
100,000
Exercise 1 3
1.
2.
Cash
Land
Building
Legaspi, Capital
Sabino, Capital
800,000
540,000
900,000
Cash
Land
Building
Legaspi, Capital
Sabino, Capital
800,000
540,000
900,000
800,000
1,440,000
1,120,000
1,120,000
Exercise 1 - 4
1.
2.
Income Summary
Santos, Capital (P238,000 x 260/425)
Abad, Capital (P238,000 x 165/425)
238,000
Income Summary
Santos, Capital (P238,000 x 3,125/5,000)
Abad, Capital (P238,000 x 1,875/5,000)
238,000
Santos:
Jan. 1 Mar. 31
Apr. 1 Apr. 30
May 1 July 31
Aug. 1 Dec. 31
Abad:
Jan. 1 May 31
June 1 Aug. 31
Sept.1 Dec. 31
3.
P165,000 x 5
215,000 x 3
195,000 x 4
148,750
89,250
P780,000
290,000
1,080,000
1,600,000
P3,750,000/12
P825,000
645,000
780,000
P2,250,000/12
Income Summary
Santos, Capital
Abad, Capital
Interest on ave. capital
Salaries to partners
Balance - equally
Net Profit
4.
P260,000 x 3
290,000 x 1
360,000 x 3
320,000 x 5
145,600
92,400
Income Summary
Santos, Capital
Abad, Capital
P312,500
P187,500
238,000
147,750
90,250
Santos
P 18,750
150,000
( 21,000)
P 147,750
Abad
11,250
100,000
( 21,000)
P
90,250
P
Total
P 30,000
250,000
(42,000)
P238 000
238,000
164,840
73,160
page 3
Santos
Bonus to Santos
25% (P238,000 - B)
Interest of 6% on excess
average investment
6% (P312,500 - P187,500)
Balance - 3:2
Net Profit
5.
Abad
Total
P 47,600
7,500
109,740
P 164,840
P 47,600
73,160
P73,160
Income Summary
Santos, Capital (P238,000 x 15/25)
Abad, Capital (P238,000 x 10/25)
7,500
182,900
P238,000
238,000
142,800
95,200
Exercise 1 5
Sanchez and Gomez
Schedule of Distribution of Net Profit
December 31, 2008
Sanchez
Gomez
6% interest on average capital
P 6,246
P 14.440
10% bonus on net profit after interest
8,331
Salaries
20,000
30,000
Balance 70%, 30%
17,488
7,495
Net Profit
P52,065
P51,935
Computation of average capital:
Sanchez, Capital
Jan. 1
P81,600 x 3
P 244,800
Apr. 1
P111,600 x 9
1,004,400
P1,249,200
Ave. capital (P1,249,200/12)
P104,100
Jan. 1
Aug. 1
Total
P 20,686
8,331
50,000
24,983
P104,000
Gomez, Capital
P224,000 x 7
P1,568,000
P264,000 x 5
1,320,000
P2,888,000
Ave. capital (P2,888,000/12)
P240,667
Computation of bonus: P160,000 x 65%= P104,000 P20,686 x 10% = P8,331

2.
Sanchez and Gomez
Statement of Partners Capital
For the Year Ended December 31, 2008
Capital, January 1
Additional investment
Net profit
Drawings
Capital, December 31
3.
6% interest on average capital
10% bonus on net profit after interest
Balance Salary ratio
Net Profit
Sanchez
P 81,600
30,000
52,065
( 41,600)
P122,065
Gomez
P224,000
40,000
51,935
( 41,600)
P274,335
Total
P305,600
70,000
104,000
( 83,200)
P396,400
Sanchez
P 6,246
8,331
34,083
P48,660
Gomez
P14.440
Total
P 20,686
8,331
74,983
P104,000
40,000
P 55,340
page 4
Exercise 1-6
1.
8% interest on beg capital
Salaries
Balance 3:2
Net Profit
Mercado
P 48,000
225,000
( 38,700)
P234,300
Puzon
P 54.000
112,500
( 25,800)
P140,700
Total
P102,000
337,500
( 64,500)
P375,000
8% interest on beg capital

Net Profit
Mercado
P 48,000
182,000
P230,000
Puzon
P 54.000
91,000
P145,000
Total
P102,000
273,000
P375,000
2.
3.
Puzon P375,000 x 2/3 = P150,000; however, minimum guaranteed amount is P160,000

Mercado P375,000 P160,000 = P215,000
Exercise 1 7
Net profit after salary, interest and bonus
Interest
P200,000 x 10%
Salary
P8,000 x 12
Net profit before interest and salary
Bonus rate
Amount of bonus to Lirio
P374,000
P20,000
96,000
116,000
P490,000
x 25%
P122,500
Exercise 1 8
1.
B = .25 x P500,000 = P125,000
2.
B = .25 x P500,000 = P100,000

1.25
3.
B
T
B
B
= .25 (P500,000 - Tax)

= .35 x P500,000 = P175,000
= .25 (P500,000 P175,000)
= P 81,250
4.
B
B
B
B
B
= .25 (P500,000 - B - Tax)

= .25 (P50,0000 - B - P175,000)
= P81,250 - .25B
= P81,250/1.25
= P65,000
Exercise 1 - 9
1.
Salary
Bonus
Interest
Estrella
P40,000
6,000
10,000
Felipe
P20,000
4,000
9,000
Garcia
P 4,000
Jimenez
P 9,400
Total
P 60,000
10,000*
32,400
Balance
Total
page 5
26,900
26,900
P82,900
P59,900
*B = 5% (P210,000 B) = P10,000
26,900
P30,900
26,900
P36,300
107,600
P210,000
Garcia
Jimenez
P 4,000
( 43,100)
(P39,100)
P 9,400
( 43,100)
(P33,700)
Total
P 60,000
32,400
(172,400)
(P 80,000)
2.
Estrella
P40,000
10,000
( 43,100)
P 6,900
Salary
Interest
Balance
Total
Felipe
P20,000
9,000
( 43,100)
(P 14,100)
3.
Interest
Bonus
Salary
Total
Estrella
P10,000
6,000
25,067
P41,067
*P37,600 x 4/ 6 = P25,067;
Felipe
Garcia
P 9,000
P 4,000
4,000
12,533
_______
P25,533
P 4,000
P37,600 x 2/ 6 = P12,533
Jimenez
P 9,400
________
P 9,400
Total
P 32,400
10,000
37,600*
P 80,000
Exercise 1-10
1.
2.
Fees Earned
Joseph, Capital
Luis, Capital
Operating Expenses
Income Summary
750,000
50,000
Income Summary
Joseph Capital
Luis, Capital
Nicolas, Capital
500,000
200,000
100,000
500,000
150,000
250,000
100,000
Exercise 1 11
1.
Capital balances before payment
of cash
Required capital balances based on
on profit and loss ratio
Cash received (paid)
Benito
Cabral
Duenas
Total
P120,000
P100,000
P100,000
P320,000
128,000
(P 8,000)
112,000
(P 12,000)
80,000
P 20,000
320,000
-
Journal entry on the partnership books

Duenas, Capital
Benito, Capital
Cabral, Capital
20,000
8,000
12,000
2.
Capital balances before additional
cash investment
Required capital balances based on
Benito
Cabral
Duenas
P120,000
P100,000
P100,000
Total
P320,000
page 6
lowest possible cash investment*

160,000
140,000
100,000
400,000
Required additional cash investment
P 40,000
P 40,000
P 80,000
* P120,000/40% = P300,000; P100,000/35% = P285,174; P100,000/25% = P400,000
Journal entry on the partnership books
Cash
Benito, Capital
Cabral, Capital
80,000
40,000
40,000
3.
Capital balances
Required capital
Additional investment(withdrawals)
Benito
P120,000
120,000
--------
Cabral
P100,000
105,000
5,000
Duenas
P100,000
75,000
(P
25,000)
Duenas, Capital
Cash
Cabral, Capital
Total
P320,000
300,000
P 20,000
25,000
20,000
5,000
Exercise 1 12
Enriquez and Flores
Schedule Showing Adjustments in Capital
Reported net profit
Adjustments:
Equipment purchased charged to expense
Depreciation on equipment
Overstatement of 2008 ending inventory
P400,000
P200,000
( 20,000)
( 24,000)
P156,000
x 65%
Corrected net profit
101,400
P501,400
Distribution of 2008 net profit

Salaries
Interest
Balance
Distribution of 2008 corrected net profit
Salaries
Interest
Balance
Adjustments
Enriquez
P120,000
30,000
51,000
P201,000
Flores
P120,000
45,000
34,000
P199,000
Total
P240,000
75,000
85,000
P400,000
P120,000
30,000
111,840
P261,840
P 60,840
P120,000
45,000
74,560
P239,560
P 40,560
P240,000
75,000
186,400
P501,400
P101,400
2.
page 7
Equipment
Enriquez, Capital
Flores, Capital
Inventory
Income Tax Payable
200,000
60,840
40,560
20,000
24,000
54,600
PROBLEMS
Problem 1 1
1.
a.
b.
c.
d.
e.
f.
g.
Merchandise, Inventory
Ruiz, Capital
60,000
Ruiz, Capital
30,000
60,000
30,000
Interest Receivable
Ruiz, Capital
P150,000 x 6% x 2/12 = P1,500
1,500
Ruiz, Capital
Interest Payable
P300,000 x 10% x 3/12 = P7,500
7,500
Ruiz, Capital
1,500
7,500
180,000
60,000
240,000
Office Supplies
Ruiz, Capital
5,000
5,000
Cash
Santos, Capital
524,500
524,500
Ruiz and Santos
Statement of Financial Position
December 1, 2008
Assets
Cash
Notes Receivable
Accounts Receivable
Less Allowance for Uncollectible Accounts
Interest Receivable
Office Supplies
Total Assets
Liabilities and Capital
Notes Payable
P
P900,000
90,000
P300,000
764,500
150,000
810,000
1,500
300,000
5,000
480,000
P2,511,000
page 8
Accounts Payable
Interest Payable
Total Liabilities
Ruiz, Capital
Santos, Capital
Total Capital
Total Liabilities and Capital
630,000
7,500
P 937,500
P1,049,000
524,500
1,573,500
P2,511,000
Problem 1-2
1.
2.
Cash
Tomas, Capital
518,000
1,152,000
Accounts Receivable
Office Equipment
Goodwill
Accounts Payable
Vicente, Capital
1,792,000
256,000
160,000
198,000
1,670,000
160,000
576,000
1,670,000
Tomas and Vicente

June 1, 2008
Assets
Cash
Accounts Receivable
Less Allowance for Uncollectible Accounts
Inventories
Office Equipment
Goodwill
Total Assets
Liabilities and Capital
Accounts Payable
Tomas, Capital
Vicente, Capital
P
P1,792,000
160,000
518,000
1,632,000
1,408,000
160,000
198,000
P3,916,000
P 576,000
P1,670,000
1,670,000
3,340,000
P3,916,000
Problem 1 3
1.
Goodwill
Equipment
Rosas, Capital
Cash
Accounts Receivable
3,000
3,000
900
1,000
2,000
3,900
5,000
46,000
108,000
2.
page 9
Equipment
Goodwill
Accounts Payable
Perlas, Capital
12,000
9,000
3,000
Cash
Accounts Receivable
Equipment
Goodwill
Accounts Payable
Perlas, Capital
5,000
46,000
108,000
12,000
9,000
3,000
Cash
Accounts Receivable
Equipment
Goodwill
Accounts Payable
Rosas, Capital
7,000
49,000
75,000
7,000
3,000
Problem 1 4
1.
Cash
Inventories
Equipment
Notes Payable
Serrano, Capital
Cash
Land
Mortgage Payable
Torres, Capital
4,000
54,000
125,000
4,000
54,000
125,000
5,000
36,000
100,000
900,000
1,500,000
3,000,000
1,050,000
4,350,000
600,000
6,000,000
1,950,000
4,650,000
Torres, Capital
Serrano, Capital
150,000
Purchases
Accounts Payable
900,000
Accounts Payable
Cash
720,000
Mortgage Payable
Interest Expense
Cash
300,000
120,000
Notes Payable
Interest Expense
225,000
75,000
150,000
900,000
720,000
420,000
page 10
Cash
300,000
Accounts Receivable
Sales
3,450,000
Cash
Accounts Receivable
3,150,000
3,450,000
3,150,000
Selling and General Expenses

Cash
Accrued expenses
870,000
Serrano, Drawing
Torres, Drawing
Cash
351,000
351,000
Income Tax
Income Tax Payable
204,750
630,000
150,000
90,000
702,000
204,750
Inventories, end
Sales
Inventories, beginning
Purchases
Interest Expense
Income Tax
Income Summary
600,000
3,450,000
1,500,000
900,000
870,000
195,000
204,750
380,250
Income Summary
Serrano, Capital
Torres, Capital
Interest on beginning capital
Salaries
Remainder 60%, 40%
Net Profit
380,250
192,150
188,100
Serrano
Torres
Total
P180,000
150,000
( 137,850)
P192,150
P180,000
100,000
( 91,900)
P188,100
P360,000
250,000
( 229,750)
P380,250
Serrano, Capital
Torres, Capital
Serrano, Drawing
Torres, Drawing
351,000
351,000
351,000
351,000
Serrano and Torres Partnership

Statement of Recognized Income and Expenses
Sales
Cost of Goods Sold:
Inventories, beginning
Purchases
P3,450,000
P1,500,000
900,000
page 11
Cost of Goods Available for Sale

Less Inventories, end
Gross Profit
Operating Income
Interest Expense
Net Profit before Income Tax
Income Tax
Net Profit
P2,400,000
600,000
1,800,000
P1,650,000
870,000
P 780,000
195,000
P 585,000
204,750
P 380,250
Serrano and Torres Partnership

December 31, 2008
Assets
Current Assets:
Cash
Accounts Receivable (P3,450,000 P3,150,000)
Inventories
Property, Plant and Equipment:
Land
Equipment
P3,000,000
Less Accumulated Depreciation
150,000
Total Assets
Liabilities
Current Liabilities:
Accounts Payable (P900,000 P720,000)
Accrued Expenses
Income Tax Payable
Long-term Liabilities:
Notes Payable (P1,050,000 P225,000)
Mortgage Payable (P1,950,000 P300,000)
Total Liabilities
P1,878,000
300,000
600,000
P 2,778,000
P6,000,000
2,850,000
8,850,000
P11,628,000
P180,000
90,000
204,750 P
P 825,000
1,650,000
474,750
2,475,000
P 2,949,750
Capital
Serrano, Capital
Torres, Capital
Total Capital
P4,341,150
4,337,100
8,678,25
0
P11,628,000

Problem 1 - 5
1. P2,700,000 (P200,000 + P1,100,000 + P500,000 + P1,500,000 P600,000 = P2,700,000)

2 P2,600,000. (P2,500,000 + P2,700,000) / 2 = P2,600,000
Problem 1 6
1.
Income Summary
700,000
page 12
Bernabe, Capital
Burgos, Capital
Interest on beg. capital
Balance 3:1
Net Profit
2.
Bernabe:
Jan. 1 May 31
June 1 Oct. 31
Nov, 1 Dec. 31
Total
P 64,000
636,000
P700 000
700,000
284,000
416,000
Bernabe
P 140,000
48,000
96,000
P 284,000
Burgos
260,000
60,000
96,000
P 416,000
P
Total
P400,000
P108,000
96,000
P700 000
700,000
394,150
305,850
Bernabe
P 90,000
49,000
255,150
P 394,150
P360,000 x 5
460,000 x 5
400,000 x 2
Burgos:
Jan. 1 June 30
P440,000 x 6
July 1 Oct. 31
Nov.1 Dec. 31
360,000 x 4
500,000 x 2
Burgos
170,000
50,800
85,050
P 305,850
P
Total
P260,000
99,800
340,200
P700 000
P1,800,00
0
2,300,000
800,000
P4,900,000/12
P408,333
P2,640,00
0
1,440,000
1,000,000
P5,080,000/12
P423,333
Income Summary
Bernabe, Capital
Burgos, Capital
Salaries
Interest on average. cap
Balance 40%, 60%
Net Profit
5.
Burgos
35,200
159,000
P 194,200
P
Income Summary
Bernabe, Capital
Burgos, Capital
Salaries
Interest on average. cap
Balance 3:1
Net Profit
4.
Bernabe
P 28,800
477,000
P 505,800
Income Summary
Bernabe, Capital
Burgos, Capital
Salaries
Interest on end capital
Balance Equally
Net Profit
3.
505,800
194,200
700,000
267,567
432,433
Bernabe
P 100,000
40,833
126,734
P 267,567
Burgos
200,000
42,333
190,100
P 432,433
P
Income Summary
Bernabe, Capital
Burgos, Capital
Total
P300,000
83,166
316,834
P700 000
700,000
329,360
370,640
Bernabe
Burgos
Total
Salaries
Interest on beg. cap
Bonus
Balance 2:3
Net Profit
B = 10%(NI S I)
page 13
P 100,000
28,800
43,600
156,960
P 329,360
100,000
35,200
235,440
370,640
P220,000
64,000
43,600
392,400
P700 000
Problem 1 7
1.
2.
6% interest on capital
Salaries
Balance 5:3:2
Net Profit
Salaries
Balance 5:3:2
Net Profit
Sandy
P 16,800
( 74,500)
P(57,700)
P 16,800
( 32,000)
P( 15,200)
Tammy
P 12,000
48,000
( 44,700)
P 15,300
Manny
P 7,200
40,000
( 29,800)
P 17,400
Total
P 36,000
88,000
(149,000)
P(25,000)
P 12,000
48,000
( 19,200)
P 40,800
7,200
40,000
( 12,800)
P 34,400
P 36,000
88,000
( 64,000)
P 60,000
P 36,000
88,000
13,500
112,500
P250,000
3.
P 16,800
P 12,000
Salaries
48,000
Bonus
13,500
Balance 5:3:2
56,250
33,750
Net Profit
P 73,050
P107,250
B = (P250,000 P36,000 P88,000 P72,000)25% = P13,500
7,200
40,000
22,500
P 69,700
Problem 1 - 8
1.
Salaries
20% bonus on net profit
Balance capital ratio
Net Profit
2.
Delmar
P 2,500
12,000
22,100
40,250
P76,850
Pilar
P 1,500
8,000
24,150
P33,650
Sales
Cost of Goods Sold
Operating Expenses
Income Taxes
Income Summary
480,000
Income Summary
Delmar, Capital
Pilar, Capital
110,500
Delmar, Capital
Pilar, Capital
Delmar, Drawing
Pilar, Drawing
6,000
10,000
Total
4,000
20,000
22,100
64,400
P110,500
P
210,000
100,000
59,500
110,500
76,850
33,650
6,000
10,000
Delmar and Pilar Company
page 14
Statement of Changes in Partners Capital

Capital balances, January 1, 2008
Add Distribution of net income for 2008:
Interests
Salaries
Bonus
Balance - capital ratio
Total share in net profit
Total
Less Drawings
Capital balances, December 31, 2008
Delmar
P 50,000
Pilar
P30,000
Total
P 80,000
2,500
12,000
22,100
40,250
P 76,850
P 1,500
8,000
24,150
P33,650
4,000
20,000
22,100
64,400
P110,500
P126,850
6,000
P120,850
P63,650
10,000
P53,650
P190,500
16,000
P174,500
Problem 1 - 9
Ramos, Gonzales and Martinez
For Three Years Ended December 31, 2008
Capital, January 1, 2006
Distribution of net loss (Sch. 1)
Withdrawals
Capital, December 31, 2006
Distribution of net profit (Sch. 2)
Withdrawals
Distribution of net profit (Sch. 3)
Withdrawals
Ramos
P 80,000
( 2,000)
(12,000)
P 66,000
7,960
(13,960)
P 60,000
21,840
(20,400)
P 61,440
Gonzales
P 48,000
( 1,520)
(14,480)
P 32,000
8,320
(16,320)
P 24,000
18,840
(24,000)
P 18,840
Martinez
P 40,000
( 2,000)
(16,000)
P 22,000
7,720
(17,720)
P12,000
18,120
(21,200)
P 8,920
Total
P 168,000
( 5,520)
(42,480)
P120,000
24,000
(48,000)
P 96,000
58,800
(65,600)
P 89,200
Gonzales
P 12,000
2,880
(16,400)
P( 1,520)
Martinez
P 12,000
2,400
(16,400)
P( 2,000)
Total
P 33,600
10,080
P 49,200
P( 5,520)
Gonzales
Martinez
Total
Schedule 1 - Distribution of 2006 net loss

Interest of 6% on beg. Capital
Balance equally
Net income
Ramos
P 9,600
4,800
(16,400)
P( 2,000)
Schedule 2 - Distribution of 2007 net profit

Ramos
page 15
Balance equally
Net income
P 9,600
3,960
( 5,600)
P 7,960
P 12,000
1,920
( 5,600)
P 8,320
P 12,000
1,320
( 5,600)
P 7,720
P 33,600
7,200
(16,800)
P 24,000
Gonzales
P 12,000
1,440
Martinez
P 12,000
720
5,400
18,840
5,400
18,120
Total
P 33,600
5,760
3,240
16,200
58,800
Schedule 3 - Distribution of 2008 net profit

Bonus - 20% (P58,800 - P39,360 - B)
Balance equally
Net income
Ramos
P 9,600
3,600
3,240
5,400
21,840
Problem 1 -10
Robles, Bernal and Reyes
Statement of Partners Capital
Robles
Berna
Reyes
Total
l
Capital balances before closing
the nominal accounts
Add Distribution of net profit:
Drawing allowance
Interest on average capital
Balance - 60%, 30%, 10%
Total
Deduct Cash distribution
P120,000
P ( 2,000)
P20,000
P138,000
20,000
7,200
58,800
P206,000
122,720
P 83,280
14,000
240
29,400
P41,640
10,000
560
9,800
P40,360
26,480
P13,880
44,000
8,000
98,000
P288,000
149,200
P138,800
P41,640
P206,000 / 60% = P343,333;

P40,360 / 10% = P403,600
P41,640 / 30% = P138,800 (required total capital)
Problem 1 - 11
Chavez, Roman, and Valdez
January 1 to November 1, 2008
Chavez
Loan
Beginning balances
Loan from Chavez
Transfer of equipment to Valdez
Balances
Distribution of loss on realization*
Salary to Valdez
Chavez
Capital
P 80,000
Roman
Capital
P 80,000
Valdez
Capital
P 80,000
P 80,000
P 80,000
( 16,000)
P 64,000
P 60,000
P 60,000
24,000
Total
P240,000
60,000
( 16,000)
P284,000
24,000
Int. to Chavez for 7 months

Balance divided equally*
Balances
Dist. of cash in final settlement
page 16
P 60,000
60,000
2,100
( 76,700)
P 5,400
5,400
*Total partners equity as shown above

Less Cash available for distribution
Loss on realization
Less Salary and interest
Total loss to be divided equally
( 76,700)
P 3,300
3,300
( 76,700)
P 11,300
11,300
2,100
( 230,100)
P 80,000
80,000
P284,000
80,000
P204,000
26,100
P230,100
Problem 1 - 12
Canlas, David, Estrella and Fajardo
Statement of Changes in Partners Capital Accounts
Investment
Net profit
Total
Less: Excess rent (P225 x 6)
Withdrawals
Uncollectible accounts
Capital, December 31
Canlas
P309,000
237,700
P546,700
David
P159,000
186,230
P345,230
P 78,000
18,000
P 96,000
P450,700
P 66,000
6,750
P 72,750
P272,480
Estrella
P327,000
140,310
P467,310
P 13,500
87,000
Fajardo
------P 24,010
P 24,010
P100,500
P366,810
P 37,500
P(13,490)
Total
P 795,000
588,250
P1,383,250
P 13,500
268,500
24,750
P 306,750
P1,076,500
P 37,500
Supporting computations:
Revenue from fees
Expenses:
Total expenses, excluding depreciation and uncollectible
accounts (P290,000 - P13,500)
Depreciation [(P195,000 x 10%) + (P75,000 x 5%)
Doubtful accounts (P24,000 x 50%)
Net profit
P 900,000
P 276,500
23,250
12,000
311,750
P588,250
Distribution of net income

Canlas
20% of gross fees from respective
clients
20% of fees after April 1 after
expenses but before bad debts
Balance -Canlas-40%, David-35%,
Estrella-25%
Total
P 66,000
171,700
P237,700
David
P 36,000
150,230
P186,230
Estrella
Fajardo
P 33,000
107,310
P140,310
Total
P135,000
P24,010*
24,010
P24,010
429,240
P588,250
page 17
Revenues
Expenses before uncollectible accounts (P276,500 + P23,250) x 180 / 900
Share of Fajardo
After April 1
P 180,000
59,950
P120,050
20%
P 24,010
Problem 1-13
1.
2.
3.
Equipment
Profit and Loss
13,500
1,350
12,150
Profit and Loss

Interest Payable
P87,500 x 6% x 10/12 = P4,375
4,375
Profit and Loss

Abaya, Capital
Reyes, Capital
159,025
63,700
95,505
Salaries
Bonus [25% x (NI B S) ]
Balance equally
Total
4.
4,375
Abaya
P 39,000
24,610
P 63,610
Reyes
P 58,500
12,305
24,610
P 95,415
Abaya, Capital
Reyes, Capital
Abaya, Drawing
Reyes, Drawing
Total
P 97,500
12,305
49,220
P159,025
36,000
62,500
36,000
62,500
Problem 1-14
1.
Jaime = 5/10 x 80% = 40%

Madrid = 3/10 x 80% = 24%
2.
Corrected net income = P250,000 (P12,000 P31,000 P20,000 + P15,000 + P9,000 x

65%) = P240,250
Jaime = P240,250 x 40% = P96,100
Madrid = P240,250 x 24% = P57,660
Soriano = 2/10 x 80% = 16%

Matias = 20%
Soriano = P240,250 x 16% = P38,440

Matias = P240,250 x 20% = P48,050
MULTIPLE CHOICE
1.
2.
3.
4.
D
D
A
C
Abena MV Cost (P90,000 P60,000)
Total
P30,000
Abena
(60%)
P18,000
Buendia
(40%)
P12,000
Buendia MV Cost (P60,000 P70,000)

Actual
Inequity
5.
6.
7.
8.
A
C
B
B
page 18
( 10,000)
P20,000
( 20,000)
P 0
( 6,000)
P12,000
( 30,000)
(P18,000)
Molinas contribution (P190,000 P60,000)

Nuevos tangible contribution
Total capital contributions
( 4,000)
P 8,000
10,000
P18,000
P130,000
100,000
P230,000
x 60%
P 138,000
130,000
P
8,000
Capital credit of Molina

Contribution of Molina
Bonus to Molina
9.
Roxas = P596,250 - P5,550 = P590,700

Bernardo = P335,000 - P4,050 - P9,000 = P321,950
10.
Roxas = (P590,700 + P321,950) x 60% = P547,590

Bernardo = (P590,700 + P321,950) x 40% = P365,060
11.
Roxas = P650,000 P590,700 = P59,300

Bernardo = P400,000 P321,950 = P78,050
12.
Bruno = P150,000 - P90,000 = P60,000
13.
Total assets = Total liab. + Total capital

= P25,000 + P300,000 = P325,000
14.
Cash contribution = (P248,850 x 1/3) P50,000 = P32,950
15
Total capital = (P158,400 + P17,500 P5,000 P5,000) 2/3 = P248,850
16.
Required capital of Esteban (P287,500 x 60%)

Non-cash contributions of Esteban (P125,000 P30,000)
Cash contribution
P172,500
95,000
P 77,500
17.
Contribution of Diaz
Contribution of Esteban (P125,000 P30,000 + P50,000)
Total partnership capital
P115,000
145,000
P260,000
18.
P115,000 + P95,000 = P210,000/2
P105,000
19.
Net increase (decrease) in capital

Add Withdrawals
Total
Less Additional investments
Profit share
Profit share percentage
Total partnership net profit
(P120,000)
260,000
(P140,000)
50,000
P 90,000
30%
P300,000
20.
21.
22.
C
B
C
23.
24.
page 19
Net profit (exclusive of salary, interest and bonus)

Salary (P2,000 x 12)
Interest (P50,000 x 5%)
Net profit after deduction of bonus
Bonus = .20 (P120,000 + Bonus) = P24,000 + .20 Bonus
= P24,000/.80 = P30,000
C
10% x P1,000,000
20% x P1,500,000
5% (P1M P400,000)
Balance equally
Net income
25.
A
Interest
Salaries
Balance equally
26.
Bustos
Cancio
P30,000
680,000
P30,000
680,000
Campos
P12,000
40,000
(70,000)
Torres
Ocampo
P 8,000
( 70,000)
6,800
Torres
(1,200)
Torres
12,000
3,400
P19,400
1,000
22,000
17,000
P44,000
Velasco
P 2,000
Total
P 2,000
12,000
(600)
P13,400
1,000
22,000
(3,000)
P22,000
Velasco
P 2,000
Total
P 2,000
10,364
P12,364
1,000
19,000
P22,000
P 1,000
P8,636
Average capital of Tamayo

P100,000 x 6 = P 600,000
160,000 x 6 = 960,000
P1,560,000/12
P130,000
Total
P 44,000
100,000
( 210,000)
Total
P 4,000
P 1,000
P10,000
(1,200)
Total
P 100,000
300,000
60,000
2,040,000
Velasco
P 4,000
P 1,000
P10,000
6,800
Sison
Bonus - 10%(P22,000 - B)
Interest on capital
in excess of P100,000
29.
Ramos
P24,000
60,000
( 70,000)
P14,000
Sison
Bonus - 10%(P22,000 - B)
Interest on capital
Balance - 4:4:2
28.
680,000
P1,080,000
Sison
Bonus - 10%(P44,000 - B)
Interest on capital
Balance - 4:4:2
27.
Alberto
P 100,000
300,000
P 93,500
24,000
2,500
P120,000
Average capital of Vidal

P225,000 x 9 = P2,025,000
155,000 x 3 =
465,000
P2,490,000/12
P207,500
page 20
Average capital of Banson - P150,000

Total int. on ave. capital= (P130,000 + P207,500 + P150,000) 10%
= P48,750
30.
Interest on ave. capital

Balance - divided equally
31.
Total capital before net income

(P475,000 + P60,000 P70,000)
Add Net profit
Total capital, Dec. 31, 2008
32.
D
Int. on average capital
Balance - equally
Net increase (decrease)
33.
P 48,750
144,000
9,000
P 201,750
Andal
P 47,250
122,325
(139,308)
P 30,267
35.
36.
37.
D
A
A
38.
Briones
P 23,865
(139,308)
P(115,443)
Camba
P 16,235
82,625
(139,308)
P( 40,448)
Net income = Net sales - CGS - Depr. - Oper. exp. Others)

= P228,000 - P123,000 - P7,500 - P58,100 x
65%
Mariano
P10,000
1,561
8,781
P 20,342
Salary to partner for 10 mos.

Bonus to managing partner
Balance based on orig. cap.
TOTAL share in profit
34.
P465,000
201,750
P666,750
TOTAL share in profit

Add Capital, beginning
TOTAL
Less Withdrawals
Capital, end
Belen
Interest
Salaries
Balance
Addl profit
for Edna
Net profit
B
Salaries
Bonus
Interest
Balance
Total
P 20,342
125,000
P145,342
20,000
P125,342
P25,610
Lucas
total
P 10,000
1,561
14,049
P 25,610
P 5,268
P 5,268
P 5,268
75,000
P 80,268
30,000
P 50,268
Total
P 87,350
204,950
(417,924)
P(125,624)
P 25,610
200,000
P 225,610
50,000
P 175,610
Lorna
Ursula
P 5,000.00
10,000.00
10,000.00
P 2,500.00
6,000.00
10,000.00
P 2,500.00
P2,000.00
6,666.67
6,666.67
P12,000.00
16,000.00
33,333.34
________
P25,000.00
________
P18,500.00
_________
P9,166.67
3,333.33
P12,000.00
3,333.33
P64,666.67
Puno
P40,000
13,000
1,000
7,000
P61,000
Edna
Quirino
P36,000
Romero
P13,650
750
7,000
P43,750
4,600
7,000
P25,200
Total
Total
P 89,650
13,000
6,350
21,000
P130,000
Computation of average capital:

Puno, capital
Jan. 1 P10,000 x 3
Apr 1 9,000 x 3
July 1 - 11,000 x 3
Oct. 1 - 10,000 x 3
Quirino, capital
Jan. 1 P 6,000 x 6
July 1 - 10,000 x 3
Oct. 1 - 8,000 x 3
Romero, capital
Jan. 1 P40,000 x 3
Apr. 1 - 38,000 x 3
July 1 - 53,000 x 6
page 21
P 30,000
27,000
33,000
30,000
P120,000 / 12
P10,000
P 36,000
30,000
24,000
P 90,000 / 12
P 7,500
P120,000
114,000
318,000
P552,00 / 12
P46,000
Let X = Net Income

P40,000 + 10% X + P1,000 + 1/3 (X P89,650 10% X P6,350 = P61,000
P40,000 + 10% X + P1,000 + 1/3 (90% X P96,000) = P61,000
P40,000 + 10% X + P1,000 + 30% X P32,000 = P61,000
10% X + 30% X = P61,000 P40,000 P1,000 + P32,000
40% X = P52,000
X = P130,000
39.
Legarda- 5/10 x 80% = 40%

Madrigal-3/10 x 80% = 24%
Sotto - 2/10 x 80% = 16%

Pimentel 20%
40.
Share of Legarda = P25,000 ( P1,200 - P3,100 - P2,000 + P1,500 + P

900 x 65%) = P24,025 x 40% = P9,610
41.
Serrano
2008 Net income
(P50,000 P8,000)
Salary to Serrano
Remainder
Divided equally
P42,000
( 36,000)
P 6,000
( 6,000)
Understatement in 2007 NI
Divided 60:40
P8,000
( 8,000)
Income allocation
Toledo
P36,000
3,000
P 3,000
4,800
3,200
P43,800
P 6,200

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CHAPTER 1

Partnership Formation and Operations

Cash (P83,500 x 1/2)

Liabilities & Owners Equity

TOTAL LIABILITIES &

AA 1 - Chapter 1 (2008 edition)

AA 1 - Chapter 1 (2008 edition)

Ave. capital (P2,888,000/12)

Computation of bonus: P160,000 x 65%= P104,000 P20,686 x 10% = P8,331

AA 1 - Chapter 1 (2008 edition)

8% interest on beg capital

Puzon P375,000 x 2/3 = P150,000; however, minimum guaranteed amount is P160,000

B = .25 x P500,000 = P125,000

B = .25 x P500,000 = P100,000

= .25 (P500,000 - Tax)

= .25 (P500,000 - B - Tax)

AA 1 - Chapter 1 (2008 edition)

Journal entry on the partnership books

AA 1 - Chapter 1 (2008 edition)

lowest possible cash investment*

Corrected net profit

Distribution of 2008 net profit

AA 1 - Chapter 1 (2008 edition)

AA 1 - Chapter 1 (2008 edition)

Tomas and Vicente

AA 1 - Chapter 1 (2008 edition)

AA 1 - Chapter 1 (2008 edition)

Selling and General Expenses

Serrano and Torres Partnership

AA 1 - Chapter 1 (2008 edition)

Cost of Goods Available for Sale

Serrano and Torres Partnership

Total Liabilities and Capital

1. P2,700,000 (P200,000 + P1,100,000 + P500,000 + P1,500,000 P600,000 = P2,700,000)

AA 1 - Chapter 1 (2008 edition)

AA 1 - Chapter 1 (2008 edition)

AA 1 - Chapter 1 (2008 edition)

Statement of Changes in Partners Capital

Schedule 1 - Distribution of 2006 net loss

Schedule 2 - Distribution of 2007 net profit

AA 1 - Chapter 1 (2008 edition)

Schedule 3 - Distribution of 2008 net profit

P206,000 / 60% = P343,333;

AA 1 - Chapter 1 (2008 edition)

Int. to Chavez for 7 months

*Total partners equity as shown above

Distribution of net income

AA 1 - Chapter 1 (2008 edition)

Profit and Loss

Profit and Loss

Jaime = 5/10 x 80% = 40%

Corrected net income = P250,000 (P12,000 P31,000 P20,000 + P15,000 + P9,000 x

Soriano = 2/10 x 80% = 16%

Soriano = P240,250 x 16% = P38,440

AA 1 - Chapter 1 (2008 edition)

Buendia MV Cost (P60,000 P70,000)

Molinas contribution (P190,000 P60,000)

Capital credit of Molina

Roxas = P596,250 - P5,550 = P590,700

Roxas = (P590,700 + P321,950) x 60% = P547,590

Roxas = P650,000 P590,700 = P59,300

Bruno = P150,000 - P90,000 = P60,000